Appraisal Letter Generator

An appraisal letter is an HR formal letter that informs an employee regarding their salary revisions and performance appraisal. The appraisal letter is also known as a Salary Increment Letter, Pay Raise Notification, and Performance Appraisal Letter.

The appraisal letter includes the revised CTC amount, the percentage of the increment, and the effective date, and often acknowledges the employee's contributions for the period under review.

A good appraisal letter motivates employees, reduces turnover, and ensures the connection between performance and reward.

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What to Include in an Appraisal Letter

Start with a recognition of the contribution of the employee towards his/her performance. Mention particular accomplishments achieved by the employee, projects completed, etc.

The compensation revision section should include:

• Comparison between the previous and revised CTC
• Increment percentage and effective date
• Updated salary structure details (salary, HRA, special allowance, etc.)
• Variable pay details, any change in stock options, or ESOPs

If there is a promotion mentioned in the appraisal letter, clearly mention details about the new designation and the new reporting structure.

Finally, conclude with future expectations and goals for the next review period.

Types of Appraisal Letters

Annual appraisal letter: Written at the end of the yearly appraisal cycle based on employee performance and budget considerations. It is the most common type.

Performance-based increment letter: Written outside the normal cycle in recognition of outstanding performance or completion of a project. It is an effective retention tool.

Promotion letter with increment: Includes the element of promotion along with salary increment. The increment will be greater than usual.

Retention-based appraisal: Issued to prevent valued employees from leaving, often in response to a competing offer.

Steps to Draft an Appraisal Letter

1. Include the employee name, designation, and department.
2. Specify the old CTC, new CTC, increment rate, and the start date.
3. Add performance details to make the letter personalized.
4. Elucidate the changed designations and other benefits.
5. Download in PDF or DOCX formats. Free and no registration required.

Best Practices

Maintain a positive and appreciative tone. Begin with genuine praise before stating the figures. Do not use vague statements; make your letter personal.

Ensure you have provided all the information about the employee's new cost-to-company package.

It is important to send the letter immediately after announcing the decision about appraisals. Preferably, have a face-to-face discussion with the employee first, followed by the letter.

Timing is very important because late delivery of the appraisal letter will make the employee anxious.